Next round of federal budget battle set to arrive Friday

Published: Tuesday, February 26, 2013 at 04:50 PM.

Two months ago, the country teetered at the edge of the “fiscal cliff” as a package of tax increases and spending and program cuts were set to take effect Jan. 1.

After weeks of haggling, national leaders finally agreed on a plan to avoid an all-out recession – but the plan appeared to only delay the next wave of economic crises that first kicked off with the Great Recession half a decade ago.

Next up in the nation’s economic and political battle: the “sequester,” a wave of $85 million in government spending cuts set to begin Friday.

Young students, seniors and government workers are among the people who could all take a hit from federal financial deductions.

A recent Associated Press survey of dozens of national economists showed concerns over the advertised cuts is causing an economic slowdown that – along with stagnant job growth and wages and cautious bank lending – will continue the rest of the year.

But President Obama and Republicans still disagree on exactly how deep the cuts would affect Americans, when the impacts would be felt and how to avoid deeper financial despair.

Two months ago, the country teetered at the edge of the “fiscal cliff” as a package of tax increases and spending and program cuts were set to take effect Jan. 1.

After weeks of haggling, national leaders finally agreed on a plan to avoid an all-out recession – but the plan appeared to only delay the next wave of economic crises that first kicked off with the Great Recession half a decade ago.

Next up in the nation’s economic and political battle: the “sequester,” a wave of $85 million in government spending cuts set to begin Friday.

Young students, seniors and government workers are among the people who could all take a hit from federal financial deductions.

A recent Associated Press survey of dozens of national economists showed concerns over the advertised cuts is causing an economic slowdown that – along with stagnant job growth and wages and cautious bank lending – will continue the rest of the year.

But President Obama and Republicans still disagree on exactly how deep the cuts would affect Americans, when the impacts would be felt and how to avoid deeper financial despair.

The Associated Press contributed to this report.

What programs are in line for cuts?

-- Money for defense programs and civilian defense employees, which U.S. defense secretary Leon Panetta says would harm the readiness of the nation’s fighting forces

-- Funding for early childhood education programs and teachers, which U.S. education secretary Arne Duncan says could leave 70,000 children from low-income families without access to Head Start programs.

-- Federal unemployment assistance: About 2 million long-term unemployed people could see checks now averaging $300 a week reduced by about $30, an estimated decrease of about $400 in benefits over a year’s time. In North Carolina, this would be on top of a recent cap on unemployment benefits for the state's residents.

-- Federal money for clean energy, school construction, state and local public works projects, heating and housing assistance, and other programs

The White House this week released the following expected impacts for North Carolina if budget cuts sink in:

* EDUCATION: About $25 million for primary and secondary education and $16 million for teachers and staff would be lost. About 1,150 fewer low-income college students would receive federal financial aid. And 1,500 children would be eliminated from qualifying for pre-kindergarten programs.

* UNEMPLOYMENT: The state would lose about $83,000 in funding for job-search assistance, referral and placement, meaning cuts to help for about 15,000 looking for work.

* SENIORS: The state could lose about $1.5 million in funding for meals for seniors.

* PUBLIC SAFETY: The state could lose $400,000 in grants that support law enforcement, prosecution and courts, crime prevention and education, corrections, drug treatment and other initiatives.

* PUBLIC HEALTH: The state could lose $900,000 to help upgrade prevention programs for public health threats such as infectious diseases and natural disasters, as well as $2 million for grants to help prevent and treat substance abuse and $340,000 for HIV testing.

* DEFENSE: About 22,000 civilian defense employees face furloughs via a $117.5 million decrease in gross pay, and combined funding for Army and Air Force operations in the state would be cut by about $140 million.

Source: White House Public Affairs office

When would the cuts happen?

Cuts on some programs are set to begin Friday (March 1). Some programs – such as defense funding and aid for the unemployed – are expected to feel early effects of budget reductions. Other cuts – such as those affecting schools – are not expected to cause serious impact until later this year.

Some national Republican leaders and economists say impacts are likely but not as immediate and severe.

Homeland Security Secretary Janet Naploitano said this week that the impact will be like “a rolling ball.”

“It will keep growing,” she said.

What’s the outlook for a deal to address the cuts?

There has been no recent indication of ongoing budget negotiations between Obama and Republican leaders to create a plan to offset the fallout of cuts.

Obama supports a package of cuts and tax increases to deal with the cuts.

House Speaker John Boehner and other Republican leaders say targeted spending cuts are the way to solve the budget problem.

Source: The Associated Press

What they’re saying:

Leaders weigh in on budget cuts and the economy:

“The big thing I feel like right now is the continued uncertainty is hurting businesses. They’re not confident to make investments. The average consumer is caught in that as well. They’re in a mode to save rather than to spend.”

-- Michael Chrisawn, president, Cleveland County Chamber

“Everyone knows we have to cut spending, but the president’s sequester plan is the wrong approach. That’s why I’ve voted twice to replace it with commonsense spending cuts. No one should be talking about raising taxes while the federal government wastes billions of dollars every year.”

-- Patrick McHenry, representative of US House District 10, which includes Cleveland County

“I wish the federal government would spend less on foreign aid. By cutting foreign aid, U.S. taxpayers’ money could be invested in defense, public health and safety, infrastructure and other items that are important to the citizens of the United States.”

“Federal government spending has skyrocketed at an alarming rate under the leadership of President Obama. It is past time that the federal government find ways to curb its excessive appetite for spending the hard-earned dollars of working Americans. The greatest risk to our economy is not a 2 percent cut in federal spending, but the massive 16 trillion dollar deficit that threatens the future of our children and grandchildren.”

“At the state level, we have not fully realized the true potential impacts of sequestration. Until we see specific proposals or results from Washington, it will be difficult to give specific forecasts. What we do know is that leaders in North Carolina will be forced to make responsible budgeting decisions, no matter what irresponsible decisions may come down from the federal government.”

-- Tim Moore, representative in NC House District 111, Cleveland County

"While reducing our deficit is one of my top priorities, indiscriminate, unprioritized cuts on the backs of our service members is not the way to get our fiscal house in order. The packs they carry and the burdens they've shouldered are heavy enough without the threat of sequestration. These cuts would have an outsized impact on North Carolina because of our strong military presence, including many defense contractors who desperately need certainty to operate their businesses. Congress still has a small window of time in which to act to avoid these drastic consequences."

What concerns you most about the budget issue? “Like” The Shelby Star on Facebook to weigh in. The Star asked its Facebook fans what they fear most if federal cuts hit and what the solution is for fixing the problem. Here’s a sample of what they said:

So many things. Social programs and education, arts in the schools. May seem to some not as important, but education and care of humanity should be most important. My thoughts.

Social Security worries me the most. All I can think about are my grandmothers who have worked very hard their entire lives, have nothing, or maybe not having enough to do as they wish. They have worked for it, they have earned it, and they deserve to keep it. I honestly would not mind paying more to Social Security if it meant my grandmothers and others like them would be able to have it. I also worry a little about defense. If other countries see us cutting back, weakening so to speak, I would think they would be much more likely to attack.

Answer is to discontinue the pay of the legislators until they reach an agreement. If something doesn't get done by Friday, Social Security employees will be "furloughed" one pay period. So, don't complain if you don't get your disability or retirement checks on time!